Ganesh Sitaraman
speaker
57 appearances
1 recordings
1 series
first heard Apr 2025
last heard Apr 2025
Ganesh Sitaraman’s voice in public audio — every appearance, attributed to the second.
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Appearances
And so what the point system is like is almost getting a little kickback every time there's a cut. And so if you're on a points earning card, you're getting that kickback. But if you're somebody who doesn't have one of these fancy credit cards, if you pay in cash, if you don't have enough money to spend hundreds of dollars to get all the best kind of point systems,
What's likely happening is you're paying higher prices for everything because businesses are including some of the costs they're sending to the credit cards in the prices of stuff and you're not getting the kickback.
Yeah, and the other challenge is even for people with the credit cards, even if you do have these points, there are all kinds of problems with how they work. And probably the biggest one, or maybe the easiest one is how I should put it, is that the point system really feels unclear. What's the average value? How much should I be thinking about these as I think about planning trips?
We do that, too.
And the reason is they don't tell you. Right. The airlines don't have a kind of exchange rate that is fixed and consistent. Right. they can change them whenever they want. They can reduce their value, they can reduce the value of the things you can get for the points, or for status if what you're interested in is status.
And so one of the things that we've seen is the kind of changing value over time in these point systems The other thing that goes on is sometimes what I think of as pretty deceptive kind of practices in this industry. So, you know, if you ever have that pop-up come up when you're buying a plane ticket and says like, you know, do you want to buy extra points? You know, the mileage multiplier.
And you can buy a thousand extra points for whatever, however much money. In a lot of cases, the estimated value of those points is a lot less than what they're charging you for them. They might be charging you three cents a point when the estimated value is one cents a point. I mean, that's the equivalent of saying, how about you give me $30 and I'll give you $10. No one would make that deal.
So I think there's a lot of things like that that could be addressed in this area to make things fairer for consumers.
I think the really key things are being careful up front. Do you really want to sign up for that credit card, which may have a huge fee every year associated with it? when it's uncertain if you're going to reach status or see how many points you're really going to get out of it and what the benefits are going to be.
So being careful about that up front, because there's a downside also to canceling credit cards. And, you know, these things impact your credit score. So being careful about that in your own personal circumstances, I think is an important thing. A second thing that people often give advice on is using points when you have them in order to prevent really them being devalued over a period of time.
The third thing that I would say, though, is looking more broadly than just these particular systems, which is talking to your elected officials about making the system better. Because the reality is this is just a set of policy choices that we can make. We can decide to say it's actually unfair to do this and you have to make this transparent.
Well, I think what's really interesting about the Department of Transportation's investigation is how it started. There was actually bipartisan interest in the Senate on this. There was a letter from Senator Richard Durbin from Illinois, who's a Democrat, and Senator Roger Marshall from Kansas, who's Republican.
And the two of them got together and wrote this letter to the Transportation Department asking, why do we have all these problems in the airline credit card systems? And I think what the real question is, is going to be on the government side, how does the new administration, the current administration, move forward with this? Do they move forward with these investigations? And where does it go?
And I think on the airline side, whether or not the current administration goes forward with this, Do the airlines recognize that there's enough interest in the public and from members of Congress on both sides of the aisle that they need to preemptively take some steps to try to make the system a little fairer?
And I think there are things they could do that would be pretty easy for them, including having a kind of fixed exchange rate, making the exchange rates transparent. There are some very specific practices that are a little unfair that they could try to address. excessive fees in transferring points from one person to another, the cost of these multipliers that are overvalued.
Those are some other things that they could do on their own. And we'll see what happens and we'll see if there's any additional public outcry.
Thanks so much for having me.
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